Chapter 2
The Current DWP Governance
Structure
Governance of the Department of Water and Power is shared
among the Board of Water and Power Commissioners, the office of the
mayor, the city council and staff, and the city attorney. In effect, the
DWP general manager reports to all of them, albeit in different ways on
different policy and operational issues. This chapter describes the
complex interactions among these governing entities, as well as the
roles of such other important actors as the city controller, the CAO,
and the CLA. It also outlines how the new city charter amendments,
which were adopted in June 1999 and went into effect in July 2000,
will affect DWP governance.
Board of Water and Power Commissioners
The 1925 Los Angeles City Charter established a five-member
Board of Water and Power Commissioners to head the DWP. Commissioners were appointed by the mayor and confirmed by the city
council to five-year, staggered terms. The commission selected its own
officers from among its members, chose the general manager,7 and generally was empowered to oversee the department.8
Because the DWP generates its own revenue from water and power
sales, the 1925 charter established it as a “proprietary department”
with somewhat more autonomy than other city departments. The
DWP has its own budget that is separate from the city’s general fund,
can hold property separate from the city, and can issue debt backed by
its own revenue rather than rely on the city’s general obligation bonds.
For more than 50 years, the commission could set salaries for DWP
employees covered under the city’s civil service system, but this authority passed to the council in 1977.
7
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GOVERNANCE IN A CHANGING MARKET
Increased Mayoral Authority over the
Commission and DWP
Although the Water and Power Commission initially had strong executive power over the department, a series of changes since the 1960s
have reduced its authority and placed it and the DWP under the control of the city’s elected officials.
The mayor exerts principal authority by appointing and removing
Water and Power Commissioners. The council must confirm each appointment and removal by majority vote, but under the new charter
amendments, the mayor may remove a commissioner without council
approval (New Charter, 1999, Section 502(d)).9 Equally important, it
has become customary for newly elected mayors to appoint their own
commissioners and remove unwanted holdovers. While justified politically as the way for the city’s top elected official to establish control
over the DWP and other city departments, this effectively has vitiated
the commission as an independent, nonpolitical governing board.
Moreover, the mayor currently selects the DWP general manager, with
council confirmation. The new charter returns CEO selection to the
commission, but subject to approval by both mayor and council.10
The mayor holds tight rein over the commission through staff
“advice” to commissioners on specific agenda items. The mayor also
requires approval of commission agenda items by the CAO under Executive Directive 39 (ED39). Originally issued by Mayor Tom Bradley
in 1984, ED39 has been used by Mayor Richard Riordan to control the
commission agendas of DWP and the other proprietary departments.
Although ED39 officially requires review only of important policyrelevant items—including proposed charter amendments and ordinances, contracts and leases with policy implications, bond and debt
orders, changes in rates or fees, and major organizational changes—it
in fact is applied to other commission matters.11 The two principal arguments for CAO review of commission agendas are to coordinate proposals from different departments and to give a citywide perspective on
matters that must ultimately go to the city council.12 However, ED39
review also has the effect of slowing commission decisionmaking and
adding another layer of bureaucracy to DWP’s already-cumbersome
approval processes.13
GOVERNANCE STRUCTURE 9
City Council Authority and Proposition 5
As the city’s legislative body, the city council has both oversight responsibility for DWP and direct authority under the city charter to approve certain commission actions, including
• tariffs, rates, and other charges;
• job classification, compensation, and other aspects of the civil
service system;
• real property sales and leases of more than five years;
• contracts of more than a fixed amount (currently $150,000) or
lasting longer than three years;
• initial authority to issue debt;
• participation with other public or private parties in major capital projects; and
• proposed ordinances or charter amendments affecting DWP.
Council ordinances further specify, in considerably more detail,
procedures for hiring and other personnel actions, issuing debt, contracting, negotiating long-term customer contracts, and many other
day-to-day operational matters. The chief legislative analyst acts as the
council’s agent on many issues and often has de facto authority in dealing with DWP.14
But the most controversial of the council’s authorities over DWP
comes from charter Section 32.3, generally known as “Prop. 5” after
the measure’s designation on the June 1991 ballot. Prop. 5 provides for
five council meeting days in which any action15 by the Board of Water
and Power Commissioners can be taken up for reconsideration by
the council by a two-thirds vote. Prop. 5 gives the council three weeks
to substitute its decision, by simple majority vote, for that made by the
commission. If the council does not make its decision during this period, the commission’s action becomes final.
Prop. 5 basically permits the council to intervene in any major or
minor policy or operational aspect of the department’s business and affairs. According to a May 1998 study by the mayor’s office, 34 matters
involving the Board of Water and Power Commissioners had been
taken up by the council under Prop. 5 (Riordan, 1998). This represented nearly one-third of the total number of “Prop. 5-ed” items. The
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GOVERNANCE IN A CHANGING MARKET
council substituted its judgment for the board’s in only 4 of the 34 matters; three commission decisions were overturned, and a fourth was
moved to the council’s direct jurisdiction.16
Although Prop. 5 has not been used often to overturn Water and
Power Commission decisions, it has had a demoralizing effect on both
the commission and the department. The threat of Prop. 5 has further
undermined the commission’s ability to exercise independent judgment in overseeing the DWP. Moreover, the need to buttress even
minor matters against the threat of Prop. 5 repudiation appears to have
led to increased paperwork and substantial delays in decisionmaking.
As a result of the new charter amendments that went into effect in
July 2000, the council’s ability to substitute its own action for that of
a commission has been replaced by a legislative veto (New Charter,
1999, Section 245). That is, the council is able only to remand the action back to the board for reconsideration and a new action. These
changes may reduce the temptation for the council to challenge commission decisions, although how they will work in practice remains to
be seen.17
Legal Representation by City Attorney’s Office
The Board of Water and Power Commissioners and DWP do not
hire their own legal staff. The city charter gives the city attorney the
role of representing the board in litigation and acting as the board’s
legal advisor (Old Charter, 1997, Section 42; New Charter 1999, Section 271). The city attorney’s office provides legal staff to the department and makes work assignments. Lawyers working on DWP matters
report to the city attorney rather than to the DWP general manager or
the commission. Upon recommendation by the commission, and with
the written consent of the city attorney, “the city may contract with attorneys outside of the city attorney’s office to assist the city attorney in
providing legal services” to DWP (New Charter, 1999, Section 275).
This arrangement has led to conflicts about who is the real client
on DWP legal matters: the commission and department or the city as a
whole? City attorneys, who are elected citywide by the voters, have typically taken the position that they and their staff represent the city at
large. But commissions and DWP general managers contend that the
GOVERNANCE STRUCTURE 11
city attorney must represent them as the clients on DWP legal matters.
The new charter comes down on DWP’s side, stating that the “boards
of the Proprietary Departments . . . shall make client decisions in litigation . . . [and] shall have the authority to approve or reject settlement
of litigation exclusively involving the policies and funds over which the
charter gives those boards control.” (New Charter, 1999, Sections
272 and 273.) But on a day-to-day basis, the city staff attorneys do not
take direction from DWP.
Table 2.1 provides a summary of the multilayer municipal governance structure for DWP and the changes introduced by the new charter amendments.
State and Federal Authorities Governing DWP
In addition to governance at the municipal level, the Water and
Power Commission and the DWP are subject to a variety of federal and
California laws and regulations. Among the most important of these
are the following:
• California’s Brown Act, which requires such public bodies as the
commission to hold all its meetings openly in public.
• California’s Meyers-Milias-Brown Act, requiring the city to
meet in good faith with union leaders for collective bargaining
purposes.
• The provisions of California AB 1890 regarding electricity restructuring and competition as they pertain to municipal utilities.
• Regulations of the Federal Energy Regulatory Commission
(FERC) regarding access and interconnection to high-voltage
transmission lines.
• Federal tax statutes and regulations that place limitations on the
use of municipal utility facilities financed by tax-exempt debt.
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GOVERNANCE IN A CHANGING MARKET
Table 2.1
DWP Governance Under 1997 and 1999 City Charters
Governance Structure
1997 City Charter
Organization
City department
Governing board
Term of office
Five-member commission;
staggered, five-year terms
Selection
Mayor appoints, council majority confirms
Removal
Mayor may remove with
council majority approval
Authorities retained by city
council (partial list)
Approval of rates
1999 Charter Changes
Mayor may remove without
council approval
Job classification, compensation
Approval of contracts, sales,
leases
Authorization of new debt
Approval of joint projects
Other limits on board authority
Council may reconsider and
change any commission decision (Prop. 5)
Council may veto but not
change commission decisions
(Prop. 5)
Open meetings required
(Brown Act)
CAO must approve agenda
items (ED39)
General manager selection
and removal
Other employee status
Mayor appoints, council majority confirms
Board appoints with mayor
and council approval
Mayor may remove with
council majority approval
Board may remove with
mayor’s approval, but twothirds council vote can reinstate
Civil service except for up to
16 exempt positions that require mayor and council approval
Up to 16 DWP exempt positions approved by mayor unless overruled by two-thirds
council vote within 10 days
Up to 150 additional exempt
positions authorized for city
as a whole, including DWP
Legal staffing and litigation
decisions
City attorney provides legal
staff
Board makes client decisions
in litigation and settlement
Use of outside legal counsel
requires written approval of
city attorney and council
Use of outside legal counsel
requires written approval of
city attorney
Council controls litigation
with city attorney acting on
city’s behalf